Friday, December 11, 2015

The Kinder Morgan Mini-Tender Has Been Withdrawn (KMI)

Following up on last month's "Stock Manipulation The TRC Capital Way: The Kinder Morgan Mini-Tender (KMI)". The writer, Bloomberg's Matt Levine knows something about securities law and  about the foibles of those in finance but here I think he is being too kind. More after the jump.
In late pre-market trade the stock is down 49 cents at $16.53.
From BloombergView:

Taxes, Mergers and Mini-Tenders
... Mini-tenders.
A mini-tender is an odd little niche trade that takes advantage of market inefficiency and investor inattention. Someone -- it often seems to be a company called TRC Capital Corporation -- offers to buy a chunk of a company's shares at a fixed price. The chunk is less than 5 percent of the shares, to avoid Securities and Exchange Commission rules about fairness and disclosure for larger tender offers. And the offer price is less than the market price of the stock. Why would you sell shares for less than their market price? There is some mumbling about brokerage fees, but the real point of mini-tenders seems to be to catch unsuspecting investors who just see a tender offer and assume that they're getting a good price....

... Last month TRC launched a mini-tender on Kinder Morgan, Inc., which warned its shareholders not to tender into the offer. That offer was for $23.30 a share, below the market price at the time. But then Kinder Morgan's stock had a bit of an accident, and it closed yesterday at $15.72, making that $23.30 mini-tender an amazing deal for shareholders....MORE
As I said in our November post:
...Most of the commentary* on mini-tenders seems to focus on investors being caught asleep at the switch but I think the more interesting question is "Is TRC profiting regardless of whether any stock is tendered?" Is the below-market mini-tender a technique to knock a stock down to the benefit of, and profit for, a person or persons unknown?...
That led to:
Here's a bit on TRC's Mr. Albaum, apparently a couple of the companies he's associated with give the legitimate boiler room/money laundering communities a bad name. 
Just sayin'...
Maybe a bit of pre-trial discovery would do TRC some good.